hook for any smoke damage. Inspect the property at least two or three times a year to ensure compliance.
If the applicant has a pet, confirm that it’s been spayed or neutered. Small spayed or neutered pets are commonly harmless. Medium or large sized pets can be harmless too, but you should collect a pet deposit if your province permits it.
I’ve Determined Market Value for My Rental Property, but What Do I Do in a Weak Rental Market?
If your rental property is in a city where the economy is suffering and unemployment is high, then there’s probably a high vacancy rate too, meaning that it will take longer to rent your property even if it is reasonably priced. Consider offering a rental incentive. Three examples of common rental incentives and their pros and cons are as follows:
Rent reduction
If similar property in the area rents for $1,000 per month, and you offer yours for $925, the odds are higher that prospective tenants will call you first. The problem with this strategy is the adverse impact on your cash flow. Most provinces only permit a small percentage rent increase each year. While the economy may improve rapidly, it may take years of rent increases to reach true market value rent. In the meantime, you could lose several thousand dollars.
Move-in allowance
You might offer a tenant a move-in allowance of several hundred dollars. Make sure the terms and conditions of the allowance are clearly specified in your rental agreement. It should be very clear that the move-in allowance is a one-time fee paid in the first month of the tenancy.
You should require the tenant to sign a fixed-term lease that guarantees they will stay a certain length of time as well. This way you avoid the unpleasant situation where you pay an incentive, only to have the tenant move out a few months later.
Offer one or half of one month’s rent free
In this arrangement, the tenant will sign a one year lease and no rent will be collected in the 12th month. The benefit of this incentive is that it rewards a tenant for staying long term. Also, unlike simply reducing the rent, you receive full market rent from the very first month of the tenancy.
Offering one month free rent will significantly affect cash flow in your first year. For a property that rents for $1,200 per month, one month free rent means a loss equivalent to $100 per month. Offering half a month’s free rent might work just as well.
As with the move-in allowance, it is essential that the terms and conditions of this rental incentive be clearly specified in the lease. It is not unusual for tenants to mistakenly believe that they are entitled to free rent once per year as long as they live on the premises. It must be clear that the free rent is a one-time incentive paid in the 12th month.
A tip that could make your tenant stay for years: Offer tiered rental incentives in the 12th and 24th month. For instance, half a month rent free in the 12th month and one whole month rent free in the 24th month. Ensure the terms and conditions of this incentive are clearly laid out in the rental agreement.
Furnished Rentals
Renting furnished space is a tempting prospect. After all, a good furnished property rents for 25 to 75 percent more than unfurnished property. An ideal furnished rental property is an apartment condominium in or near the downtown core of a major city or an area sought-after for tourism. Smaller one- and two-bedroom apartments are good candidates for this type of rental because they can be furnished more inexpensively than larger rental property.
However, this arrangement is not desirable for most landlords, and it is certainly not recommended for inexperienced landlords. It may require significant cash up front to adequately furnish the rental. Carrying costs are higher as well, as you are expected to pay for all utilities including cable/Internet access and you will have to pay these fees even when the property is vacant. You are also commonly expected to offer some sort of housekeeping service.
The most time-intensive part of property management is time spent finding tenants. The owner of a furnished rental has to do this many times each year. It can be tempting for a landlord in such circumstances to lower tenant selection standards, making the risk of letting a bad tenant in much higher.
Strata or condominium corporations may not permit owners to run this type of rental business. The bylaws of your corporation may state that prospective tenants must sign a one year lease, or they might require a move-in fee of several hundred dollars. The move-in fee is payable even if the incoming tenant doesn’t move anything of significance into the suite other than a suitcase. Such bylaws make short-term tenancies less profitable.
It is possible to have a profitable furnished rental business, but in order to be successful it is necessary to put in much more time and effort than most landlords are prepared to do. Renting the space unfurnished is the best way to go for the vast majority of landlords. Keep it simple!
Chapter 4
LANDLORDING ESSENTIAL: MEMBERSHIP IN A LANDLORD ASSOCIATION
In this chapter, you will learn to:
• Join a landlord association in your province even if you only own one rental unit.
• Choose an association that provides services and advice at low or no additional cost outside the annual membership fee.
You will periodically find yourself needing expert tenancy law advice. You could ask your provincial rental authority for guidance, but government institutions are often overwhelmed with inquiries and do not always provide quick answers.
Also, you must keep current with changes to residential tenancy law. Simply put, it’ll cost you if you don’t. In 2004, for instance, British Columbia’s Residential Tenancy Act changed to require landlords to complete a move-in/move-out inspection report with their tenant. Landlords oblivious to the change were subsequently shocked to learn that failing to complete the move-in/move-out inspection report caused them to lose their right to retain any portion of the security deposit even if the property was obviously damaged by the existing tenant.
It is not the provincial government’s responsibility to provide you with a notice of change, and ignorance of the law is never an acceptable excuse. What’s a landlord to do? Even if you own only one rental unit, you should join a landlord association in your province. Not all associations are equal. The best ones offer the following services at low or no additional cost beyond the annual membership fee.
Access to a legal information hot line
Most landlord associations offer members a number to call for prompt tenancy law information. As well, the landlord association might offer insights that the provincial rental authority staff does not. Knowing the written legislation is one thing, but knowing how it works in practice is another. When you ask your landlord association for help, you receive advice from real landlords who can show you how to make the law work to your benefit.
Access to landlord-friendly rental forms relevant to your province
Provincial
